Kickstarter thinks Ireland is still in the UK
Now that’s what I call employee loyalty…
Here’s an interesting sight – this is not photoshopped! I quickly snapped a picture of this guy’s tattoo last week when he was stopped at a red light.
Why silicon valley will always be a world leader in entrepreneurship
There is a lot of talk from other regions around the world about how they will become the next silicon valley. Calling themselves the Silicon Glen, Silicon Forest, Silicon Alley, etc etc. But that’s what most of it is, just talk. I think the main difference between the real silicon valley and the rest of the contenders is substance. It’s the huge network of venture capitalists here who all know each other and compete for deals. It’s the universities that supply some of the world’s best talent (or at least they are perceived to be the best) to startups. It is blogs like www.techcrunch.com that feed the machine with stories, gossip and fuel the fire of young entrepreneurs, wanting to make money on the next new disruptive technology. It’s also the weather – the weather and landscape around here make it a very attractive place to live and work.
I want to give two examples of this huge difference between here (Silicon Valley) and other regions. Dublin, in Ireland is booming right now, but only in one sector – high technology startups. A friend of mine Connor Murphy, has a startup called DataHug and he can’t find the engineers he needs – there is a huge talent shortage in Dublin as companies from Silicon Valley have sucked up a lot of the local talent. Zynga, Paypal, Google and many others have set up their EU headquarters in Ireland. However, what’s missing in Dublin is one key ingredient – venture capital finance. I was at the excellent conference run by Paddy Cosgrave called the Dublin Web Summit (#DWS6) recently and Mike Butcher from TechCrunch was on stage and asked a few simple questions to the crowd.
1. Who here is a CEO/founder/employee of a startup company?- about a quarter of the hands in the audience went up.
2. Who here is involved in some other way with startups? – again, many hands went up
3. Who here is a venture capitalist?- Out of a crowd of over 1000 people, only 2 hands went up, including Will Prendergast from NCB.
This is what’s missing in Ireland, but it’s certainly not missing here in Silicon Valley. I know there were a few other VCs in that crowd who didn’t have the balls to put up their hands. It was like they wanted to hide and just not make any deals!
One more example. I was in the Apple Store the other day in Palo Alto, arguably the heart of Silicon Valley. I was getting my Macbook Air fixed and I overhead a conversation by this kid. He was talking to the ‘genuises’ in the store about a software program he was devloping. “I’m a developer” he said proudly. I was really curious, and I started chatting with him and asked:
“So you’re a developer are you?” “Yes, I’m making a game!”
“What are you developing” – “A game on the iPad, called Trigger Finger”
“Where did you learn to code?” – “In a summer code camp, in Stanford University”
“In what language?” – “Objective C”
“How old are you?” – “I just turned 12″
I was blown away – this is why Silicon Valley will always be No. 1. You have a crazy amount of talent here, as witnessed by this young developer. I don’t know what you were doing when you were 12, but I certainly wasn’t coding in a top university. I would have liked to learn to code!
For any aspiring Silicon Pretenders – start thinking more like Silicon Valley – start some summer code camps and start giving money to crazy young startups – you never know what might happen.
Groupon’s Accounting System Seems Fine – Groupon is a Strong Company
The last week or so has been downright tough on Groupon. The Wall Street Journal, many tech tweeters and tech bloggers have been unforgiving, suspicious of Groupon.
I read the reports, looked at the financials, considered the argument that Groupon applied a “fuzzy accounting” standard. As a businessman, I am certainly sensitive to any appearance of impropriety. I know that when a start-up becomes successful what was initially okayed by the CPA as Generally Acceptable Accounting Principles (GAAP) can suddenly become “fuzzy accounting.” I never intend to be in that position.
That being said, I actually accept Groupon’s accounting and financial system as reasonable and financially sound based on Groupon’s unusual business model.
The link is to Groupon’s S-1 statement filed with the SEC - http://sec.gov/Archives/edgar/data/1490281/000104746911005613/a2203913zs-1.htm
Critics have been suspicious because in 2010, Groupon generated revenues of $713 million and reported an operating loss of $420 million. However, in the same S-1, Groupon claims that it will make money in 2011 using a different measure of operating income. Groupon calls this “Adjusted CSOI.” Adjusted CSOI means “Consolidated Segment Operating Income.”
The Groupon critics claim that the term Adjusted CSOI carries two pieces of information that create what is being termed “fuzzy accounting”
(1) the word “adjusted” and
(2) a new acronym for earning.
I disagree that the accounting is fuzzy or deceptive in any manner whatsoever.
According to Groupon, “Adjusted CSOI” – income (before expensing to acquire new subscribers) is taken into account. According to the Groupon critics, since this expense amounted to about a third of overall operating expenses in 2010, removing it increased profitability significantly.
But the Groupon critics are forgetting the basics of accounting.
The argument for Groupon’s accounting system is that the enormous cost of acquiring new customers creates benefits over many years. And, once a customer is acquired, he or she continues to use Groupon for years. The acquisition costs are capital expenses and should not be netted out to arrive at the operating income. Acquisition costs should always be capitalized. In the case of Groupon, the acquisition costs just happen to be those associated with acquiring the customers. Unusual? Perhaps. But it is not so unusual that we should dismiss the argument summarily.
Consider reclassifying acquisition costs from a valuation perspective. For growing companies like Groupon, reclassifying acquisition costs can make the earnings look positive. However, reclassifying acquisition costs will also increase the capital invested at the growing companies (because the acquisition costs will be capitalized).
The reclassification of acquisition costs can arguably change perspectives on whether the growing company is actually profitable and creating value. But that is not, in my opinion, an issue in this case because the Groupon business model is unique. In the long run, the key profitability number is the return on invested capital – not the operating margin. And, Groupon admits that it invests a significant amount of capital in what it spends to acquire customers. That decision is appropriate especially and so long as the customers are repeat and/or long-term.
Groupon’s recent interface with the ShopSavvy application provides assurance that Groupon’s customers’ will indeed be repeat and/or long term. ShopSavvy benefits Groupon and Groupon’s customer base by sending coupons focused to person, preferences, location. ShopSavvy provides greater likelihood that customers will continue to use Groupon.
In the words of Mark Twain, Groupon: “the report of [our] death is exaggerated.”
Will Mobile Devices Replace Window Shopping?
Will mobile devices ever truly replace window shopping? The American economy is built on small to medium-sized brick and mortar businesses. Nothing compares to actually trying on a pair of slacks or walking through a huge Home Depot to locate the perfect lighting fixture. I cannot fathom a world without shopping malls and annoying parking lots.
But what do the retail experts think? Will mobile shopping applications complement the shopping experience and improve retail sales? Or are we destined to make most purchases on-line and then wait patiently for the UPS truck?
The retail experts (at the NRF’s Digital Division shop.org) recently released the results of an extensive study about shopping habits. The study evaluates consumer behaviors and attitudes toward social commerce. The study entitled “How Shoppers Interact with Retailers Through Social Networks“ examines the behaviors and attitudes of consumers regarding social media. http://is.gd/BWgQsx This research also examines the popularity of “group-buying sites” and location based applications.
According to the 2011 Social Commerce Study (a joint research project by Shop.org, comScore and Social Shopping Labs), 42 percent of online consumers have followed a retailer proactively through Facebook, Twitter or the retailer’s blog. http://is.gd/BWgQsx The survey further found that the average consumer follows approximately six retailers. The reasons for following the retailer online vary from finding deals, keeping current on products and to learn about information on contests and events. http://is.gd/BWgQsx
Shoppers are also using mobile devices for product research and information while actually shopping in stores. According to the survey, nearly half of shoppers (47%) have accessed customer reviews in store using their mobile device with men (55%) more likely to access these reviews in store than women (39%). http://is.gd/BWgQsx
The good news is that window shopping (and therefore brick and mortar businesses) are unlikely to go the way of the dinosaurs anytime soon. The even better news for the mobile technology industry is that shoppers want to be more informed before they make purchases. Shoppers are actually looking for the product information on mobile devices. And, most shoppers still enjoy the outing to a “real store” if for no other reason than to examine a product prior to purchase.
Our goal/responsibility as members of the mobile technology industry is to encourage our retail business customers to take time to truly understand the needs of the end use shopper. What information does the shopper need to make an informed buying decision?
So long as we all focus on the end use shopper, mobile devices will enhance and compliment (not replace) the shopping experience. Ideally, the mobile device technology will bring the shopper into the retail store and stimulate a now slumping economy.
Note to shoppers: please look up periodically from your mobile device while walking through the retail store. Accidental collisions are avoidable.
Saving Businesses Money by Reducing Traditional Advertising Costs
TapMap can save businesses money by eliminating the need for most expensive traditional business advertising.
This week let’s take the example of a small to medium (average sized) business with little to moderate name recognition. “Advertising” can be the life-blood of such a business. The question becomes what “advertising” is effective and what “rate of return” is realistic on traditional advertising?
Most average brick and mortar businesses consider traditional advertising to include paper White Telephone Book, square ad in paper Yellow Telephone Book, television campaigns, weekly advertising in the local newspaper and perhaps occasional mass mailings. The average business is looking for name recognition and increased sales. Can those goals be achieved with paper and television advertising alone? Probably not.
As explained by Megan Jones, president and CEO of Lokion, the Memphis advertising agency that made Inc. Magazine’s list of the 5,000 fastest-growing companies in the nation,
[Megan Jones] designs no print ads, no TV campaigns, executes no PR and makes no apology about it.
“Nope. Our creative focus is exclusively online. … Everyone has their strengths,” Jones said. “Ours is interactive.”
Internet-based advertising is Madison Avenue’s fastest-growing niche. By 2011, the $65.2 billion spent online this year will morph to $106.6 billion, according to IDC Digital Marketplace Model and Forecast
Jane Roberts. “Business clicking online — Advertising gets up to speed on cyber highway.” The Commercial Appeal (2007-Current). Sun-Times News Group. 2008. Retrieved May 29, 2011 from HighBeam Research: http://www.highbeam.com/doc/1P2-21834835.html
What do your customers and potential customers need to know about your business? Of course, name recognition is essential to get customers to your business. Traditional print and television media are expensive and most businesses agree that results are limited or questionable.
Businesses that rely solely on traditional advertising are now at a grave disadvantage. Internet sites extent “word of mouth” miles, states, and countries beyond where the business owner even dreamt.
The Internet gets the “word of mouth” name recognition out about many product and service businesses. Other businesses are taking advantage of nominally priced business web sites. These inexpensive or free advertising options can be incredible for the business owners who treat customers honestly and provide a good product and excellent service.
All ages of consumers are using the Internet to navigate and make purchasing decisions. From children to grandma and grandpa, increasing segments of potential customers are comfortable searching product information on-line with lap tops, GPS devices, Androids, IPads, IPhones and other mobile devices.
Enter the technology available with TapMap! Your business can be small, medium, start-up or traditional brick and mortar in a charming downtown area. Your business may be getting amazing reviews and feedback on the Internet. Very nice. Good job. But let’s bottom-line this. Your customers want to know the price of your product or service.
Customers rarely check the traditional White and Yellow Pages. It is just plain simpler (even for grandma and grandpa) on the Internet. No dirty, dusty papers and no tiny print that ends up on innocent fingers.
TapMap allows our businesses’ end use customers to see what products are in stock and at what price. That information drives customers into your business because they know the actually product is available for purchase. No “rain-checks,” lost sales or, worse yet, disappointed customers. No amount of traditional advertising can provide that benefit.
In addition, TapMap Analytics helps businesses to understand up to the minute trends in their industries. With this information, business owners don’t have to guess about trends or rely on sales reps to pitch what the business owner’s end users “will probably buy.” No telephone Yellow Page book can provide that information. Business owners know what products their customers want and need. Customers are happy. Life is good.
Wasn’t Technology Supposed to Make Life Easier?
Beware Technology “Over-organizing”
It’s late springtime in the United States. Great times to be with friends, family or even just enjoy nature or relaxing on the couch with an e-book.
Don’t get me wrong – I like a good tech challenge. But in order to remain in sync with customers’ needs, I need to be in the real world. Frankly, I like the real world. (Remember, the TapMap concept was conceived because I could not find a bicycle part in San Francisco).
In my opinion, the best applications are those where end use customers search on-line thinking “there must be an application somewhere for this problem.” Again with my shameless self-promotion (but it is my blog) TapMap solves a problem that both retailers and customers have, it is a win-win, transaction complete and life moves on!
In contrast, there are many applications that claim to “make life easier.” One can organize their business (or home) with multiple “get organized” applications (or books) and be left unorganized, penniless and frustrated.
My recommendation for those with (and without) technological expertise is to step back from the computer once in awhile. Talk to one another. Become friends in the real world. Business people have needs that they believe are insurmountable. Medium to small businesses don’t even know technology experts could help.
Suppose a tech guy (or gal) is a customer in a small business and notices a need – voila. An otherwise frustrating business problem becomes a tech challenge identified and resolved. An industry is helped. Commerce flows, time freed for customers and retailers. That is no small accomplishment in the current economy.
Even better is a tech guy (or gal) takes a social road trip, hike, picnic, and dinner with a “normal person.” Tech people and “normal people” need to get out more and away from business and enjoy life.
We needn’t struggle to find technological problems to resolve. There are plenty of them out there. With the increasing price of gasoline, declining economy and pressures on people’s time, tech can simplify life for all by helping the retailer-customer relationship. But first we have to be in the real world.
TapMap on TV
I got on TV the other day, thanks to Plug and Play – it was a feature about why international entrepreneurs were flocking to silicon valley. I was there as part of iExpo, Plug and Play’s international expo day, where 35 companies from around the world pitched in front of an audience of 60 VCs and 400 silicon valleyites. It was great fun, and we actually came in 2nd!
I am now the proud owner of a brand new Samsung Galaxy Tab.
Notes on Rejection…
Taken from @cdixon and and @techcrunch article…
“But being able to handle rejection, and even seek it out, is a crucial skill for entrepreneurs. The flip side of getting rejected over and over again, of course, is perseverance. It doesn’t matter if 49 VCs pass on your startup if the 50th one hands you a check for $1 million, or if 24 engineers say No, but the 25th is a rockstar who says Yes. Getting to yes means letting the negativity wash over you.”
